Hassan Chahadeh, M.D. v. Jacinto Medical Group, P.A. and Paradise Marketing and Consulting, L. P. , 2017 Tex. App. LEXIS 2169 ( 2017 )

Opinion issued March 14, 2017
In The
Court of Appeals
For The
First District of Texas
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NO. 01-16-00347-CV
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HASSAN CHAHADEH, M.D., Appellant
V.
JACINTO MEDICAL GROUP, P.A. AND PARADISE MARKETING AND
CONSULTING, L.P., Appellees
On Appeal from the 61st District Court
Harris County, Texas
Trial Court Case No. 2015-44173
OPINION
Hassan Chahadeh, M.D., personally guaranteed loans made by Jacinto
Medical Group, P.A. and Paradise Marketing and Consulting, L.P. to University
General Health System Inc. and University General Hospital, L.P. (collectively
“UGH”). Subsequently, UGH defaulted on the loans and filed for Chapter 11
bankruptcy protection. Appellees sent notice and demand to Chahadeh requesting
payment under the guaranty agreements, but Chahadeh did not pay. Appellees sued
Chahadeh for breach of the guaranty agreements and filed a traditional summary-
judgment motion, which the trial court granted.
In his sole issue on appeal, Chahadeh argues that the trial court erred by
granting summary judgment because the bankruptcy court has exclusive jurisdiction
over appellees’ claims against him and the summary-judgment evidence did not
conclusively establish the amount of his liability. We affirm.
Background
The promissory notes & guaranty agreements
Chahadeh is the CEO of University General Health System Inc. and the
Chairman of University General Hospital, LP. In February 2014, Jacinto loaned
University General Health System Inc. $1,400,000 under the terms of a promissory
note. At the same time, Paradise made two loans to University General Hospital,
L.P.—one in the amount of $360,000 and one in the amount of $457,979.81—under
the terms of two corresponding promissory notes.
The dispute in this case centers on two guaranty agreements that Chahadeh
executed personally guaranteeing the three promissory notes. One guaranteed
payment of the Jacinto promissory note, and the other guaranteed payment of the
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two Paradise promissory notes. In both guaranty agreements, Chahadeh agreed to
pay any amounts due under the promissory notes if UGH1 defaulted on them:
In the event of default by [UGH] in payment or performance of the
Guaranteed Indebtedness, or any part thereof . . . [Chahadeh] shall
promptly pay the amount due hereunder . . . within two (2) business
days after notice and demand.”
The agreements provided that they were guarantees of payment, not collection:
This instrument shall be an absolute, continuing, irrevocable, and
unconditional guaranty of payment and performance, and not a
guaranty of collection . . . .
They also provided that Chahadeh could not assert a setoff or reduction defense to a
demand for payment:
No setoff, counterclaim, recoupment, reduction, or diminution of any
obligation, or any defense of any kind or nature which [UGH] may have
against Lender or any other party, or which Guarantor may have against
[UGH], Lender, or any other party, shall be available to, or shall be
asserted by, Guarantor against Lender . . . or against payment of the
Guaranteed Indebtedness or any part thereof.
In addition, Chahadeh agreed that his obligation would not be diminished if UGH
declared bankruptcy:
Guarantor hereby agrees that its obligations under this Guaranty
Agreement shall not be released, discharged, diminished, impaired,
reduced, or affected for any reason or by the occurrence of any event,
including . . . any disability of [UGH], or the dissolution, insolvency,
or bankruptcy of [UGH].
1
The guaranty agreements are substantively identical.
3
UGH declares bankruptcy
In February 2015, UGH and affiliated companies filed a voluntary petition
seeking Chapter 11 bankruptcy protection. Appellees filed claims in the bankruptcy
proceeding for the amounts UGH owed them under the three promissory notes and
other agreements. Appellees later sent notice and demand to Chahadeh for payment
under the guaranty agreements, but he refused to pay.
The underlying lawsuit
Appellees sued Chahadeh for breach of the two guaranty agreements. After
discovery, appellees moved for summary judgment and supported the motion with
evidence, including copies of the three promissory notes, the two guaranty
agreements, the demand letter, and Chahadeh’s responses to their requests for
admission. They also submitted the affidavit of Siraj Jiwani, the Chief Executive
Officer of Jacinto and the Vice President of Paradise, who averred that UGH
defaulted on the promissory notes, payment under the guaranty agreements was
demanded from Chahadeh, and he had not paid. Jiwani’s affidavit also set forth the
total unpaid guaranteed indebtedness owed by Chahadeh under each of the two
guaranty agreements and the amount of interest accruing on each per day. Chahadeh
responded and argued that summary judgment was improper because the bankruptcy
court had exclusive jurisdiction over appellees’ claims against him. The trial court
granted summary judgment. Chahadeh appealed.
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Discussion
Chahadeh argues that the trial court lacked jurisdiction because appellees’
filing of a proof of claim in the bankruptcy court vested that court with exclusive
jurisdiction over their claims against him. Chahadeh also contends that the trial court
erred in granting summary judgment in appellees’ favor because appellees’
summary-judgment evidence regarding damages was self-contradictory and
therefore did not conclusively establish the amount of his liability.
A. Standard of Review
“We review a trial court’s summary judgment de novo.” Travelers Ins. Co. v.
Joachim, 315 S.W.3d 860, 862 (Tex. 2010). “We review the evidence presented in
the motion and response in the light most favorable to the party against whom the
summary judgment was rendered, crediting evidence favorable to that party if
reasonable jurors could, and disregarding contrary evidence unless reasonable jurors
could not.” Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d
844, 848 (Tex. 2009).
When reviewing a summary judgment, we must (1) take as true all evidence
favorable to the nonmovant and (2) indulge every reasonable inference and resolve
any doubts in the nonmovant’s favor. Id. In a traditional summary-judgment
motion, the movant has the burden to show that no genuine issue of material fact
exists and that the trial court should grant judgment as a matter of law. TEX. R. CIV.
5
P. 166a(a), (c); KPMG Peat Marwick v. Harrison Cty. Hous. Fin. Corp., 988 S.W.2d
746, 748 (Tex. 1999). If the movant meets its summary-judgment burden, the
burden shifts to the nonmovant, who bears the burden to raise a genuine issue of
material fact precluding summary judgment. Lujan v. Navistar Fin. Corp., 433
S.W.3d 699, 704 (Tex. App.—Houston [1st Dist.] 2014, no pet).
B. Applicable Law
A guaranty is a promise to a creditor by a third party to pay a debt on behalf
of a principal in the event that the principal defaults on the original obligation. See
Republic Nat’l Bank of Dallas v. Nw. Nat’l Bank of Fort Worth, 578 S.W.2d 109,
114 (Tex. 1978). To support a claim for breach of a guaranty, a party must show
proof of (1) the existence and ownership of a guaranty contract; (2) the terms of the
underlying contract by the holder; (3) the occurrence of the conditions upon which
liability is based; and (4) the failure or refusal to perform by the guarantor. Lee v.
Martin Marietta Materials Sw., Ltd., 141 S.W.3d 719, 720 (Tex. App.—San Antonio
2004, no pet.).
“The law recognizes two distinct types of guaranty: a guaranty of collection
(or conditional guaranty) and a guaranty of payment (or unconditional guaranty).”
Cox v. Lerman, 949 S.W.2d 527, 530 (Tex. App.—Houston [14th Dist.] 1997, no
pet.) (first citing Universal Metals & Mach., Inc. v. Bohart, 539 S.W.2d 874, 877
(Tex. 1976); then citing United States v. Vahlco Corp., 800 F.2d 462, 465 (5th Cir.
6
1986); then citing Ford v. Darwin, 767 S.W.2d 851, 854 (Tex. App.—Dallas 1989,
writ denied)). A guaranty of collection is an undertaking of the guarantor to pay if
the debt cannot be collected from the primary obligor by the use of reasonable
diligence, and requires the lender to pursue the principal debtor before collecting.
Id. In contrast, a guaranty of payment is an obligation to pay the debt when due if
the debtor does not and requires no condition precedent to its enforcement against
the guarantor other than a default by the principal debtor. Id. Unlike a guarantor of
collection, a “guarantor of payment is primarily liable and waives any requirement
that the holder of the note take action against the maker as a condition precedent to
his liability on the guaranty.” Id. (citing Hopkins v. First Nat’l Bank at Brownsville,
551 S.W.2d 343, 345 (Tex. 1977) (per curiam)). “A guarantor of payment is thus
akin to a co-maker in that the holder of the note can enforce it against either party.”
Id. (citing Reece v. First State Bank, 566 S.W.2d 296, 297 (Tex. 1978)).
The terms of a guaranty agreement determine whether the guaranty is a
guaranty of collection or of payment. See Berry v. Encore Bank, No. 01-14-00246-
CV, 2015 WL 3485970, at *2, *5 (Tex. App.—Houston [1st Dist.] June 2, 2015, pet.
denied) (mem. op.) (citing Yamin v. Conn, L.P., No. 14-10-00597-CV, 2011 WL
4031218, at *6 (Tex. App.—Houston [14th Dist.] Sept. 13, 2011, no pet.) (mem.
op.)). When construing a guaranty agreement, our primary goal is to ascertain and
give effect to the parties’ intent. Id. (first citing Coker v. Coker, 650 S.W.2d 391,
7
393 (Tex. 1983); then citing Hasty v. Keller HCP Partners, L.P., 260 S.W.3d 666,
670 (Tex. App.—Dallas 2008, no pet.)). Where the language is clear and
unambiguous, the best guide to the parties’ intent is the language of the guaranty.
Id. (first citing Univ. Sav. Ass’n v. Miller, 786 S.W.2d 461, 462–63 (Tex. App.—
Houston [14th Dist.] 1990, writ denied); then citing Sw. Sav. Ass’n v. Dunagan, 392
S.W.2d 761, 767 (Tex. App.—Dallas 1965, writ ref’d n.r.e.)). We strictly construe
a guaranty in favor of the guarantor. Cox, 949 S.W.2d at 530.
C. Did the trial court lack jurisdiction over appellees’ claims against
Chahadeh?
Because it implicates our own jurisdiction, we first address Chahadeh’s
argument that appellees’ filing of a proof of claim in the bankruptcy court vested
that court with exclusive jurisdiction over appellees’ claims against Chahadeh.
Bankruptcy courts have “original and exclusive” jurisdiction over all cases “under
title 11,” but have only “original but not exclusive” jurisdiction over “all civil
proceedings arising under title 11, or arising in or related to cases under title 11.” 28
U.S.C. § 1334(a), (b). Thus, the only aspect of a bankruptcy proceeding over which
the bankruptcy court has exclusive jurisdiction is the bankruptcy petition itself. In
re Walker, 51 F.3d 562, 568 (5th Cir. 1995); Matter of Brady, Tex., Mun. Gas Corp.,
936 F.2d 212, 218 (5th Cir. 1991) (quoting In re Wood, 825 F.2d 90, 92 (5th Cir.
1987)). State courts have concurrent jurisdiction over any other matters that arise in
or relate to cases under title 11. Brady, 936 F.2d at 218.
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While appellees’ suit against Chahadeh is arguably “related to” UGH’s
bankruptcy petition, the bankruptcy court does not have exclusive jurisdiction over
a suit that is merely “related to” a bankruptcy petition. See 28 U.S.C. § 1334(b);
Brady, 936 F.2d at 218; see also Novosad v. Cunningham, 38 S.W.3d 767, 770 (Tex.
App.—Houston [14th Dist.] 2001, no pet.). Rather, it is well-settled that state courts
have concurrent jurisdiction over proceedings “related to” a bankruptcy petition. 28
U.S.C. § 1334(b); Brady, 936 F.2d at 218; see also Novosad, 38 S.W.3d at 770
(automatic bankruptcy stay ordinarily does not extend to actions against parties other
than debtor, including guarantors). Accordingly, the bankruptcy court did not have
exclusive jurisdiction over appellees’ claims against Chahadeh.
The cases that Chahadeh cites do not support his argument to the contrary.
These cases stand for the propositions that the bankruptcy court has exclusive
jurisdiction over proceedings that only arise in bankruptcy, to allow or disallow
claims against the debtor’s estate. See Langenkamp v. Culp, 498 U.S. 42, 44 (1990)
(bankruptcy court has exclusive jurisdiction over allowance and disallowance of
bankruptcy claims against debtor); In re Wood, 825 F.2d at 97 (bankruptcy court has
exclusive jurisdiction over “core” proceedings, i.e., proceedings that by their nature
only arise in bankruptcy); America’s Favorite Chicken Co. v. Samaras, 929 S.W.2d
617, 630 (Tex. App.—San Antonio 1996, writ denied) (bankruptcy court has
exclusive jurisdiction over allowance and disallowance of bankruptcy claims against
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debtor). Chahadeh is not the bankruptcy debtor, and appellees’ suit for breach of the
guaranty agreements is not a proceeding that only arises in bankruptcy. In short,
Chahadeh provides no authority to support his claim that the trial court lacked
jurisdiction to decide appellees’ breach of guaranty claims.
Chahadeh also contends that his liability under the guaranty agreements could
not be conclusively established until the bankruptcy court determines UGH’s
liability on the underlying promissory notes. Chahadeh contends that his liability
could be reduced or discharged if UGH’s liability on the underlying promissory
notes is reduced or discharged by the bankruptcy court. But Chahadeh’s liability
under the guaranty agreements is a separately enforceable obligation. See Cox, 949
S.W.2d at 530. Chahadeh expressly agreed that his obligation would not be reduced
or discharged, even if UGH declared bankruptcy:
Guarantor hereby agrees that its obligations under this Guaranty
Agreement shall not be released, discharged, diminished, impaired,
reduced, or affected for any reason or by the occurrence of any event,
including . . . any disability of [UGH], or the dissolution, insolvency,
or bankruptcy of [UGH].
The sole case Chahadeh relies upon to support his argument, Republic National Bank
of Dallas v. Northwest National Bank of Fort Worth, 578 S.W.2d 109 (Tex. 1978),
does not address a guaranty like Chahadeh’s, which provides that he is primarily
liable for the debt and that his obligation would not be diminished if UGH declared
bankruptcy. See Cox, 949 S.W.2d at 530. Under the terms of the guaranty
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agreements, Chahadeh may be held independently liable for the amount of the
outstanding debts under the promissory notes without regard to the outcome of the
bankruptcy proceeding. See id.; see also Berry, 2015 WL 3485970, at *5 (court
construes terms of guaranty like any other contract to give effect to intent of
drafters).
In sum, the trial court had jurisdiction over appellees’ claims against
Chahadeh, see Brady, 936 F.2d at 218, and Chahadeh may be held independently
liable for the amount of the outstanding debts under the terms of the guaranty
agreements without regard to the outcome of the bankruptcy proceeding.2 See Cox,
949 S.W.2d at 530; Brady, 936 F.2d at 218; see also GATX Aircraft Corp. v. M/V
Courtney Leigh, 768 F.2d 711, 717 (5th Cir. 1985) (preventing lender from pursuing
claim against guarantor of debt because debtor had filed bankruptcy petition would
be “legally inequitable”).
D. Did appellees meet their burden to conclusively establish their breach of
guaranty claims?
Appellees filed a traditional motion for summary judgment on their breach of
guaranty claims. The elements of a breach of guaranty claim are: of (1) the existence
and ownership of a guaranty contract; (2) the terms of the underlying contract by the
2
Appellees’ recovery could be limited by the single satisfaction rule, however. See
In re Wash. Bancorporation, No. 90-00597, 1996 WL 148533, at *16–17 (D.D.C.
Mar. 19, 1996) (no double recovery allowed).
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holder; (3) the occurrence of the conditions upon which liability is based; and (4) the
failure or refusal to perform by the guarantor. See Lee, 141 S.W.3d at 720.
Appellees’ summary-judgment evidence included a copy of the two guaranty
agreements executed by Chahadeh, one personally guaranteeing payment of the
Jacinto promissory note and the other the two Paradise promissory notes. The
agreements expressly provided that they were guarantees of payment and not
collection. Each stated:
This instrument shall be an absolute, continuing, irrevocable, and
unconditional guaranty of payment and performance, and not a
guaranty of collection . . . .
Chahadeh agreed that he could not assert a setoff or reduction defense:
No setoff, counterclaim, recoupment, reduction, or diminution of any
obligation, or any defense of any kind or nature which [UGH] may have
against Lender or any other party, or which Guarantor may have against
[UGH], Lender, or any other party, shall be available to, or shall be
asserted by, Guarantor against Lender . . . or against payment of the
Guaranteed Indebtedness or any part thereof.
Chahadeh also agreed that his obligation would not be diminished if UGH declared
bankruptcy:
Guarantor hereby agrees that its obligations under this Guaranty
Agreement shall not be released, discharged, diminished, impaired,
reduced, or affected for any reason or by the occurrence of any event,
including . . . any disability of [UGH], or the dissolution, insolvency,
or bankruptcy of [UGH].
The agreements provided that if UGH defaulted, Chahadeh would “promptly pay the
amount due hereunder . . . within two (2) business days after notice and demand.”
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The summary-judgment evidence also included an affidavit from Jiwani, the
Chief Executive Officer of Jacinto and the Vice President of Paradise. Jiwani
averred that UGH had defaulted on the three promissory notes secured by
Chahadeh’s two guaranty agreements. Jiwani averred that Jacinto and Paradise sent
Chahadeh a written notice of default demanding that he pay the outstanding balances
under the two guaranty agreements, but Chahadeh had not made any payments after
this demand. Jiwani averred that the total unpaid guaranteed indebtedness owed by
Chahadeh as of October 15, 2015 was $1,398,561.64 under the Jacinto guaranty and
$920,267.48 under the Paradise guaranty. Jiwani further averred that interest was
accruing at the rate of $616.44 per day under the Jacinto guaranty, and $393.52 per
day under the Paradise guaranty.
Appellees also submitted copies of the three promissory notes and a copy of
their demand letter to Chahadeh. In addition, the summary-judgment evidence
included Chahadeh’s responses to appellees’ requests for admission, in which he
admitted that he had received the demand letter but had not paid.
Consequently, appellees’ summary-judgment evidence conclusively
established the existence of the guaranty agreements in which Chahadeh had agreed
to pay upon demand if UGH defaulted. See Lee, 141 S.W.3d at 720. The evidence
also conclusively established that UGH defaulted on the loans, that appellees had
demanded payment from Chahadeh, and that he had not paid. See id. Further, the
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evidence conclusively established the amount Chahadeh owed under the two
guaranty agreements: $1,398,561.64 under the Jacinto guaranty as of October 15,
2015 with interest accruing at a rate of $616.44 per day, and $920,267.48 under the
Paradise guaranty as of October 15, 2015 with interest accruing at a rate of $393.52
per day.3 Accordingly, appellees conclusively proved the essential elements of their
breach of guaranty claims. See id.
Chahadeh contends that summary judgment was improper because he raised
a fact issue regarding whether the summary-judgment evidence conclusively
established the amount that he owed under the guaranty agreements. Specifically,
Chahadeh argues that Jiwani’s averment regarding the amount Chahadeh owed
under the Paradise guaranty—$920,267.48—was lower than the amount Paradise
sought in its bankruptcy claim—$1,217,979.81. Chahadeh argues that this
discrepancy raises a fact issue that precludes summary judgment. Appellees respond
that the difference between the two figures is the amount that UGH owes Paradise
under profit-sharing agreements for which Chahadeh did not guarantee payment.
3
The trial court’s judgment awarded damages as of December 11, 2015, 57 days after
October 15, 2015, in the amount of $2,376,396.84. This is the sum of:
$1,398,561.64 Owed on Jacinto guaranty as of 10/15/15
$920,267.48 Owed on Paradise guaranty as of 10/15/15
$35,137.08 ($616.44 x 57) Daily interest on Jacinto guaranty x 57 days
+ $22,430.64 ($393.52 x 57) Daily interest on Paradise guaranty x 57 days
$2,376,396.84
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The summary-judgment evidence shows that there is no conflict between
Jiwani’s affidavit and the Paradise bankruptcy claim. The difference between the
amount of Paradise’s bankruptcy claim and the amount Jiwani averred Chahadeh
owed Paradise is comprised of the amount allegedly owed to Paradise by UGH under
profit-sharing agreements that Chahadeh did not guarantee. Jiwani averred that
Chahadeh owed $920,267.48 under the Paradise guaranty, which was composed of
$797,979.81 in principal and $122,287.67 in accrued interest. Paradise’s bankruptcy
claim shows that the $1,217,979.81 it sought from UGH was composed of the
$797,979.81 in principal owed under the two promissory notes plus $420,000 owed
under profit-sharing agreements. Chahadeh guaranteed the two promissory notes,
but not the profit-sharing agreements. Accordingly, we conclude that Chahadeh did
not raise a fact issue and the trial court did not err by concluding that the summary-
judgment evidence conclusively established the amount that Chahadeh owed. See
TEX. R. CIV. P. 166a(a), (c); KPMG, 988 S.W.2d at 748; Lujan, 433 S.W.3d at 704.
We overrule Chahadeh’s sole issue.
Conclusion
We affirm the trial court’s judgment.
Rebeca Huddle
Justice
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Panel consists of Justices Keyes, Bland, and Huddle.
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